Beyond the need to boast: Cost concealment incentives and exit in Cournot oligopoly |
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| Authors: | Jos Jansen |
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| Institution: | 1. Amsterdam School of Economics, University of Amsterdam, Valckenierstraat 65-67, 1018 XE Amsterdam, The Netherlands;2. Tinbergen Institute, Gustav Mahlerplein 117, 1082 MS Amsterdam, The Netherlands;1. Faculty of Economics, Kansai University, 3-3-35 Yamate-cho, Suita, Osaka 564-8680, Japan;2. Faculty of Economics, Wakayama University, 930 Sakaedani, Wakayama 640-8510, Japan;3. Institute of Economic Research, Kyoto University, Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501, Japan;1. Department of Information Management, National Chi-Nan University, Nantou, Taiwan;2. Finance Group, D''Amore-McKim School of Business, Northeastern University, Boston, MA, USA;3. Department of Finance, Ming Chuan University, Taipei, Taiwan |
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| Abstract: | This paper studies the incentives for production cost disclosure in an asymmetric Cournot oligopoly. Whereas the efficient firm (consumers) prefers information sharing (concealment) when the firms choose accommodating strategies in the product market, the firm (consumers) may prefer information concealment (sharing) when it can exclude its competitors from the market. Hence, the rankings of expected profit and consumer surplus can be reversed if exit of the inefficient firms is possible. Although the efficient firm has stronger incentives to share information when it shares strategically, there remain cases in which the firm conceals information in equilibrium to induce exit. |
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